I'm Not Counting on Social Security to Fund My Retirement and You Shouldn't Either. Here's Why
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Millennials and Gen Zers planning on Social Security to fund their retirement may want to reconsider.
For years, there's been talk about the Social Security fund running out of money. The government program could see its funds depleted sooner if President Donald Trump cuts Social Security taxes.
As a personal finance expert who saved enough to retire comfortably at 40, I've worked with dozens of clients to help them calculate how much they need to save now to afford retirement. Whether Social Security is around, I can tell you with confidence that you shouldn't rely on this program to fully fund your future expenses.
The monthly payments you'll receive from Social Security aren't enough to cover most of your expenses -- and these payments are only expected to decrease. Here's how Social Security benefits work and how to plan for your retirement without relying on this program's future.
Read more: Do You Have to Pay Income Taxes on Social Security? Everything You Need to Know
How do Social Security earnings work?
Social Security is a government-run program we pay into through our payroll taxes -- employees pay 6.2%, employers pay 6.2% and self-employed individuals pay the full 12.4%.
The money you pay in Social Security payroll taxes goes directly to current beneficiaries rather than into a personal savings account for you. So what you're paying now is for the generation before you and you will be paid out based on what the next generation puts into the pool of money.
How much you'll receive from Social Security depends on whether you're single or married, how much you earned over your 35 highest-earning years and the age you are when you retire. Most people can start claiming benefits at 62 but the longer you wait, the more your monthly payout could be. You can use the Social Security benefits calculator to estimate what you're expected to receive.
Read more: Social Security 2025: What Goes Into Determining Your Monthly Payment and How to Maximize It
Will Social Security exist when you retire?
Yes, it's likely that Social Security will be around when you retire. However, you may not receive the full benefit offered to current retirees. The Social Security Administration's 2024 annual report found that the program will likely be able to pay 100% of the current benefits through 2035. After that, retirees would receive 83% of their scheduled benefits.
What could that look like? As of April 2025, the average Social Security payout for retirees is $1,948 per month. If you were to receive 83% of that, it would drop to approximately $1,617 per month.
Is Social Security enough to fund your retirement?
Most people count on Social Security to help fund their retirement savings. However, no matter how frugal you are, your Social Security payout alone is likely not enough income to cover your needs in retirement. Although $1,948 -- or $1,617 if you'll retire after 2035 -- isn't an insignificant amount, it's not enough to cover living expenses for any of my clients, and it's likely not enough for you.
Social Security is a crucial part of many retirees' monthly income -- but it shouldn't be your sole retirement plan.
Constance Craig-Mason of National Social Security Advisors agrees. "Financial well-being isn't just about the numbers -- it's about stability and peace of mind. Social Security should be viewed as a foundation, not the sole pillar of retirement planning."
Don't rely on Social Security alone. Do this instead
Rather than speculating about the fate of Social Security, I recommend putting together a plan now to start growing your own retirement fund. Even if you can't save much, starting small is better than pushing it down the road. Here are the preemptive steps I took that helped me plan for traditional retirement and let me save enough money to retire early in my 40s.
1. Review your options and set up a retirement fund
Saving for retirement can feel impossible if you're living paycheck-to-paycheck and struggling to afford your rent, mortgage and other essentials. My first step doesn't require investing any money at all. Instead, I'd encourage you to review your options and get accounts set up so that you're ready to save when you're able to contribute.
I also highly recommend talking to people in your life who are retired or nearing retirement age to learn how they got started.
2. Max out your employer-sponsored plan
If your job offers a 401(k) or other retirement plan with a match, your best bet is contributing to that account until you reach your yearly maximum. This is your best bet, because your employer will meet part of your contributions, helping you grow your money faster. Because of retirement changes in the SECURE 2.0 Act, you may even be eligible to contribute to a workplace plan if you're part-time, depending on when the plan was set up.
My husband and I are focused on contributing to our sponsored plans before investing anywhere else. It's an automatic way to earn extra money for retirement without much effort. This year, you can contribute up to $23,500 to your 401(k). If you're 50 or older, you can contribute an additional $7,500.
3. Open an IRA next
If you reach your 401(k) max contribution, aim to invest in an individual retirement account next. The max IRA contribution limit for 2025 is $7,000.
Whether a Roth or traditional IRA makes sense depends on your estimated tax rate now and in the future. Both let you grow your money tax-free; a Roth IRA lets you contribute post-tax dollars, while a traditional IRA is funded with pre-tax dollars then taxed when you withdraw from it. Too many of my clients open a brokerage account instead of an IRA, not realizing they're losing their hard-earned money in taxes each year.
4. Put extra money toward your mortgage now
A good way to help your Social Security income and retirement fund stretch even further is by eliminating steep expenses. Owning your home outright gets rid of one of your biggest expenses. This sounds like a lofty goal, but it's possible. I focused on paying off $300,000 of debt, including my home, in three years. If you're getting a tax refund, work bonus or other windfall, pay it toward your mortgage if you can. Every bit can bring your balance down.
5. Lower your housing expenses, if you can
If you're open to relocating, consider places with lower taxes and housing costs so you can put more money toward your retirement goals. A decade ago, my husband and I made the bold move of leaving my hometown of New York City to settle in Charlotte, North Carolina, which was much more affordable. We've saved tens of thousands of dollars in taxes, car insurance and living expenses each year.
Even if you're not ready to move across the country, considering lower-cost neighborhoods in your area can make a big difference. We also downsized in Charlotte and decided to rent. The money we would have put toward home repairs and upkeep has freed up extra money for us.
6. Take advantage of health savings accounts
Health care is one of the biggest expenses in retirement. So investing in your health now can save money later. Get in the habit of filling up tax-advantaged accounts such as a flexible spending account or health savings account to help you save money on your health expenses. Keep in mind that an FSA account is offered through your employer but you can set up an HSA yourself.
These accounts can incentivize you to use those funds toward the health care resources you need to keep healthy habits in the long run as you won't pay as much out of pocket for health care purchases, check-ups and procedures. Then you can use your take-home pay to focus on your retirement plan.
Focus on what's in your control
We can't predict exactly what will happen with Social Security but we can take action now to reduce financial anxiety about the future.
As Craig-Mason encourages, "When you combine Social Security benefits with smart saving strategies, intentional money management and a focus on aligning finances with your well-being, you're building a retirement plan that's sustainable and fulfilling -- no matter what uncertainties lie ahead."
The worst thing you can do? Assume Social Security will cover everything. Instead, start planning today.
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